By Megan Poinski
Only about 43% of all jobs created by projects funded by the $787 billion federal stimulus bill went to people who were unemployed, according to a new study from the Mercatus Center at George Mason University.
The rest of the jobs, according to the study, went to people who were already employed elsewhere, were just out of college, or were not part of the labor force. Job-switchers got about 47% of all of the jobs created by the stimulus package, the study states.
According to Recovery.gov, the federal government website that tracks stimulus spending, hundreds of thousands of jobs have been created nationwide through the American Recovery and Reinvestment Act. Between April and June of this year, 555,408 stimulus jobs exist nationwide, with more than 8,300 in Maryland.
Study co-author Garett Jones, an economist at the market-oriented Mercatus Center, said that the percentage of unemployed people taking the newly created jobs from stimulus funds is the same as the percentage of unemployed people who take new jobs during normal economic times.
The study results came from interviews with about 1,300 firms around the country.
“Both employers and workers told us the same story: There is a lot of job-switching going on, and not so much job creating,” Jones said.
Targeting the wrong industries?
The stimulus bill was designed to get more people who had lost their jobs during the recession back to work. While unemployment figures soared nationwide, and more job seekers clamored for employment, Jones said that survey results showed something interesting.
Despite the larger pool of unemployed potential job applicants, just under half of the employers included in the study (47%) said that they found it easier to hire people for stimulus-funded jobs. About 41% of employers found no difference in hiring during the recession as they had in the years before. And 12% of employers found it harder to hire during the recession.
Jones said this shows that the stimulus funds may have targeted some of the wrong kinds of projects. While billions of dollars went to “green” projects, for example, many of the people who can do that kind of work tend not to have problems finding jobs. Meanwhile, people who do not have college educations may have had fewer opportunities to find a stimulus-funded job they qualified for.
“Many of these projects are good to do, but are they things that are job-creating?” Jones asked.
He said that to avoid this problem, it might have made more sense for stimulus funds to be allocated based on unemployment rates as well as projects that those unemployed people could do. Instead, he said, funds were divided up by politicians and based on more standard funding formulas.
Any growth at all?
Since many of the stimulus-funded jobs attracted people away from other jobs, Jones said it is not likely that they were replaced. Hence federal stimulus funds may have worked to shrink the private sector economy.
“Economists tend to think that in a recession, every time an employee walks out the door, they are doing their employer a favor because they don’t have to pay them anymore,” he said.